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Delinquency Up on HELs, Down on HELOCs

Mortgage News

The quarterly performance of bank-owned closed-end home-equity investments worsened. But an improvement was reported for open-end home-equity assets.

Of all closed-end consumer loans that were held by the country’s banks as of the third-quarter of last year, 1.41 percent of them were at least 30 days delinquent.

The total reflects
the performance on eight types of bank-owned, closed-end, consumer loans including home-equity loans and loans secured by mobile homes.

The American Bankers Association reported the data.

Consumer loan delinquency
worsened by five basis points compared to the prior quarter. But the rate was down 10 BPS from the year-prior quarter.

“Slower job and household income growth made for fewer improvements in delinquency rates,” ABA Chief Economist James Chessen stated in the report.

In line with overall consumer loan performance, the 30-day rate on HELs was up one basis point from the second quarter to 2.91 percent.

HEL delinquency, however,
has tumbled versus the third-quarter 2014, when the rate was 3.24 percent.

ABA reported that the 30-day rate on home-equity lines of credit declined three BPS to 1.31 percent as of the third-quarter 2015.
A 21-basis-point year-over-year improvement was recorded for HELOCs.

On property improvement loans, the 30-day rate was 0.87 percent, four BPS better than three months earlier
but five BPS worse than a year earlier.

At 3.59 percent, the past-due rate on mobile home loans was four BPS worse than in the second quarter
but five BPS better than as of the third-quarter 2014.

“The steady decline in home-related delinquencies has been a bright spot as they grind their way back to pre-recession levels,” Chessen added. “We expect this trend to continue as the housing market keeps gaining strength.”

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